Yesterday it was reported that Germany had bowed to France's demand that there be no treaty changes to allow for the eurozone bail-outs and new economic "governance" but today's articles report Sarkozy has said that treaty changes will be necessary after all and that progress towards economic government of all the 27 eurostates should be strengthened.
Ms. Merkel agreed that Europe needs more integrated "economic government"—a French phrase that Germany has long resisted—while Mr. Sarkozy accepted that such coordination should take place mainly at the level of the 27-country European Union, and not, as France has insisted up to now, among the smaller circle of 16 countries that share the euro.The rumours about a Spanish bailout persist:
In the meantime, Spain admitted that the European financial crisis is taking a toll on the country's banks, with foreign banks refusing to lend to some. Spanish Treasury Secretary Carlos Ocana admitted officially for the first time that some Spanish banks faced a liquidity freeze in the interbank market and said the government was working to restore confidence.There's more trouble ahead for Greece as another ratings agency, Moody's, followed S&P's lead last month and downgraded their sovereign debt to junk level. No wonder the EU is talking about creating their own credit ratings agency!
Almost three-quarters of investors recently polled by Bloomberg News said they believed Greece would default on its debt payments. Greece's budget cuts and ailing economy are unlikely to generate enough wealth to meet interest payments, investors say. The Greek prime minister George Papandreou also faces internal turmoil, as civil servants and public sector benefit holders radically oppose the fiscal tightening.Since he hasn't had his name in the papers for, ooh, at least 24hrs, Barroso has grabbed some more headlines by saying that some countries in Europe could be headed for "military coups" . Who better to rescue them from themselves than the incredibly open and democratic EU? At least any popular uprisings will give EuroGendFor a chance to test its strengths.
Mr Barroso’s warning lays bare the concern at the highest level in Brussels that the economic crisis could lead to the collapse of not only the beleaguered euro, but the EU itself, along with a string of fragile democracies.And this farcical Franco-German political, economic and military construct is what Cameron & Co want to ally us with.
Cross-posted
